The latest edition of The Strip Podcast features bits of an interview with Steve Wynn mostly related to Macau and the opening of his first venture there last month. If you haven't listened, it's an interesting companion bit to the Sheldon Adelson piece from a few weeks back.

From the interview and others like it, we know that Steve Wynn believes that while development on the so-called 'Cotai Strip' will at some point down the road bear fruit, he thinks that time is 5-7 years off when the area is more built out. Wynn Resorts purchased land on the Cotai Strip and plans to develop up to three hotels there. Wynn's been clear that he thinks Cotai will be great, just not in the next couple of years.

Adelson's position is a bit different. He's currently constructing the first Cotai property, the Venetian Macau. When it opens in 2007, it will at first sit all by itself out there, though it is designed to be a fully integrated resort and will offer a wide array of facilities, much as the Venetian in Las Vegas does today.

I'm not asking if Cotai is a good idea or not - everyone agrees that Cotai is likely the long-term future of Macau. What I'm asking is if this is the right time or if Cotai will have a slow start until more of the planned hotels are on-line...

Will Adelson have to wait until 2010 or 2012 to reap the benefits and is Las Vegas Sands making a mistake to not massively expand the Sands hotel component along with these other projects?

Comments

I think Wynn's place in Macau is a great idea. Fat-cats count for so much of a high-end place's business, so rather than making them come to the casino he's bringing a casino to them. One of these high-rolling Asian businessmen who don't want to fly out to gamble can go to Wynn Macau and run up some activity on their player's card there. Wynn Macau can then treat these players with complimentary trips to Wynn Las Veags.

And then you have the Hong Kong locals on vacation who want to go to what's being called the most beautiful hotel in town. These people, while not big-shots, do gamble pretty fiercely compared to North America (more on that later) and never would have vacationed to Vegas in the first place, so for Wynn that's just a bonus market giving him extra money.

Furthermore, I think his location is, for the forseeable future, better than Cotai. Stanley Ho has been running the only game in town there for 40 years. If one of our current Strip giants was the ONLY operator for half a generation, they'd have quite a player base.

Ho is building his Grand Lisboa nearby, and the local HK press is of course painting it as the local businessman's big new impressive flagship to go to war with the invading American resort, but in reality I can't see this investment as a bad thing at all for Wynn. All of Ho's players, which is basically anyone who has played in Macau in the past few decades and is still alive, probably knows about this thing, and his regular players will want to check it out. When they go, they'll at least kick the proverbial tires of Wynn Macau. AND there's MGM-Mirage's resort coming this same area soon, and they have enough resorts and rooms under their thumb here that they'll probably be doing much the same thing.

While Wynn's hotel is almost an outpost satellite resort of Wynn LV, Adelson is kind of lowering himself a few notches on my personal admiration list for the way he's trying to make a corporate repackaging of the whole Las Vegas experience, encompassing just about everything but it's most controversial elements like callgirls to your room and Elvis impersonators, and create an imitation of it in his own special way. Of course, we'll see how it really comes out looking once it's finished, but there's no denying what he's trying to do, else why call his main drag The Strip?

Granted, Adelson has reason to do what he's doing, he's moved up the world's richest person's list significantly on the back of Sands Macau, which until Wynn was the only operation worth talking about in Macau and, more or less by itself, is responsible for making Macau top Vegas in gambling revenues. You have to give Macau visitors credit, they're SERIOUS about gambling. To most LV visitors, gambling is what you do when you're waiting for a show or not yet ready for dinner or just need to sit down. To most Macau visitors, attractions seem to be something to look at when you're too wiped out in the pocketbook to keep gambling.

However, those impressive figures are just GAMBLING revenues at a large yet still modest casino with no hotel, after all. So whether Macau visitors want exotic animals and flashy resorts and canals and French-Canadian circus acts and so on isn't yet proven.

Of course, as someone who lives here and moved from another city that had lost it's competitive edge in it's home industry (telecom) and has practically died as a result, I'd hate to see the same sort of thing happen to Las Vegas. Granted, every venture from Atlantic City to the Foxwoods Hotel has been called "The New Las Vegas" at some point or another, but this time it'll be different because this time the project is being spearheaded by the same names that built modern Las Vegas. Will they turn on us for the massive population of Asia and their propensity to gamble hard and gamble often? I hope not.

October 21, 2006 10:15 PM
Posted by chris

I think the Venetian will do just nicely, but given the cost and the scale, it won't be able to get anywhere the same ROI that the Sands has provided.

People seem to think that the conference / convention market has been non-existent in Macau. However, prior to SARS and since SARS, the Westin Resort in Macau has been more or less full with conferences and conventions. I went to several there myself and I know quite a few other people that have also been to conferences held at the Westin. The Westin is on the south side of Coloane - about as far away from Macau peninsula as possible. Granted, its probably only got a few hundreds rooms at most, but it has been running at full capacity for quite a while now and there would be far more people using its facilities if they had more capacity. So its not hard to imagine that with a much larger capacity, more dining / entertainment options and a massive casino that the Venetian will do very nicely with the conference / convention stuff, just as they have in Las Vegas.

The firm I used to work at just had one of their annual conferences at Wynn Macau. They probably filled up 100-120 rooms for a few days, though I don't know how many of them would have gambled (the people I spoke to said they were amazed by the rooms and all had an excellent time, though there was nothing particularly conference-like about the room they held their meetings in, which was just one of the Wynn ballrooms). There is no doubt that they'll move to the Venetian next year, because I am sure that the Venetian will be more geared towards providing conferences and will be offering some attractive packages.

The main problem I see is transport - unless you take a taxi (for which there are regularly very long waits) its just plain hard to get to Cotai. So LVS will need to have its own large fleet of buses constantly moving people from the Zhuhai border and the ferry terminal. The advantage of the Sands, Wynn, Lisboa and MGM is that they are far more centrally located and most people visiting Macau (whether they want to gamble or not) will probably walk past them anyway. The light rail system is still a few years off (though, wisely, the western bridge between Macau and Taipa was designed and built by the main Chinese railway construction company so has a track already inside it) which will solve a lot of problems. Also no progress yet on the Taipa ferry terminal - I heard from someone that LVS was possibly looking to have its own fleet of ferries from HK - though not sure whether that will eventuate.

Cotai will be magnificent once 4-5 venues are up and running - until that happens though the downtown venues won't have much to worry about.

I read some Chinese-language press in Macau which had a few complaints from Chinese about Wynn - they were all scared of going to the pool area because it is directly behind reception and is there for all people who come into the hotel to see (behind glass windows) - so they feel that there is basically no privacy for them to laze around in their swimwear. I see their point - if you were a woman looking to go to a nice resort / hotel to relax for a few days, you wouldn't want tens of thousands of mainland guys walking past and staring at you while you improved your tan by the pool.

I didn't realize reception's glass windows overlooked the pool like that - I would consider that a design flaw for sure. Gawkers don't inspire comfort... At least the pools at WLV are hard to get a look at unless you do the convention walk and most folks don't.

Wow! Steve Wynn must really like Steve. It blows my mind how this guy keeps getting interview after interview. And it just seems like when they are together, Wynn just lets the info flow nonstop. Who is right? Maybe they both are. I hope Wynn takes the top spot for years to come, but Venetian will do well, I have no doubt. I just hope Wynn breaks ground on his next Macau project ASAP. Sheldon is smart, but the bottom line is, Wynn just builds a better mouse trap, and I don't think many people could argue that.

I listened to your latest podcast, Hunter, and I'm convinced both downtown and Cotai Strip will do extremely well. Since I haven't been to Macau, I rely on news reports, excellent information from Chris and today, the photos Macau posted. Downtown is already coming into its own with Wynn and the just opened Galaxy StarWorld. Those plus Sands, Grand Lisboa and next year's MGM Grand are already threatening Las Vegas' dominance. Macau gaming revenue in the first six months was $3.1 Billion compared to $3.3 Billion for the Las Vegas Strip.

In answer to your question about Adelson not adding hotel rooms to Sands, in my opinion, Sands will stay strong, benfitting from interest in Wynn, MGM Grand next year and the other casinos. Sheldon Adelson knows the convention and meeting business from his Comdex experience and from his huge success with Venetian and Sands Expo Center. I'm sure he has a very strong management team already lining up a steady supply of meetings for the Cotai Strip. I have no doubt that he will fill all of the Venetian Macau rooms profitably from day one. Chris' comment was interesting that Adelson may operate his own ferry fleet from Hong Kong. What a great way to capture business as soon as people deplane in Hong Kong.
I don't think Cotai will have a slow start. The additional hotels and attractions coming online in the next few years will be gravy to Venetian Macau, not a necessity for success.

October 22, 2006 2:27 PM
Posted by Mike E

Excellent pictures! I was actually up late last night looking for a property map. Thank you!

From the map, Wynn Macau reminds me of Tower Suites in Las Vegas. Not surprisingly, they've both got about the same number of rooms. It's obvious they went through great length dividing casino and public spaces, but it looks like Okada, Wing Lei, etc are right off the floor (maybe you can't enter them off the casino as seems to be the case with Wing Lei?). I thought that was against the law.

I'm still not totally convinced the Macau market will be able to immediately absorb another 3,000 rooms but I think we'll see what the occupancy is like at Wynn Macau - if it is above 90% then I'm probably wrong about this. We'll see.

I'm going to color correct and post the photos on my site as well. They'll be the same set of stuff.

What is so interesting about Macau that China mainland visitor numbers continue to rise. News just came out that now Haikou are relaxing their travel rules. I still believe that the Chinese government rather have their citizens visiting Macau than Las Vegas. Let's face Macau's Gaming Tax revenue is getting quite impressive. For sure the Chinese are tempted by the Western style casino's and so far Sands and Wynn has proven this to be correct.

However Galaxy and STM are not sitting on their laurels and are fighting back. We must not forget that Stanley has his daughter Pansy lined up with MGM and that his company Melco, even though supposely indirectly through his son Lawrence is linked with Crown Casino's PBL.

I still like to know how they are going to fill the Cotai Strip as +/-95% are Chinese and are daily or overnight visitors! So if they want to get non Asian visitors, they better start to improve their infrastructure fast as at present Macau has about 60,000 visitors a day. So with all the 30,000 new hotel rooms coming up in the next 5 years I am keeping my fingers crossed!

October 23, 2006 12:10 AM
Posted by macauphoto

Just a couple quick thoughts on the comments above from Mike E:

Wynn Macau is actually setup the same as Wynn Las Vegas in regards to the hotel tower. The tower is split into 2/3 and 1/3. From the map, the elevators that say executive office are also the elevators that got to the suites side. There are no villas on top of the casino roof, as in Vegas, but the rooms at the end of the building are suites with two master bedrooms, massage room, dining room and great room with TV and bar. These rooms are in the buldge at the end of the building which is what would be the stairs in Vegas so you have the entire end of the building for one suite with floor to ceiling windows. These suites are on every floor. In addition, this is the same elevator that you take to the Sky Casino. The Sky Casino is located near the top of the building and has rooms with several gaming tables in them that over look the ocean/city with floor to ceiling windows.

The casino and public spaces are divided at Wynn Macau because they have metal detectors that all guests have to walk through prior to entering. Metal detectors are standard in every casino in Macau. The only restaurants that you can enter without going into the casino are Il Teatro and Cafe Esplanada. Cafe Esplanade is both a buffet and regular restaurant. You can also enter Tryst without going through the casino. Again this is normal to have to enter the casino to go the restaurants as it is the case at Sands and StarWorld.

You may want to check out this new website of the Galaxy Starworld that just openend on October 19.

www.galaxystarworldmacau.com

I guess this is their attempt to counter the US ca sino invasion!

Regarding rising casino income, well the Chinese stockmarket has been the fasted rising stock market in the world so far. So we will see more well heeled(or should I say pocketed) Chinese gamblers trying their luck in the Macau casiono's and thus increasing Macau's gaming income.

I think VIP baccarat numbers maybe dropping as there are now more games available for the punters to try their luck on.

The Macau Regional government plans to spend $525 Million to build an elevated metro system which will connect the peninsula with Cotai Strip, the airport and the mainland China border. It is scheduled for completion in 2010. This will definitely help the two gaming/tourist areas of Macau.

The Australian newspaper talks about PBL and Melco's third planned Macau casino, on the peninsula, near MGM Grand. It also mentions that the PBL/Melco consortium may list its casino assests on the NASDAQ to raise $1 Billion.

Finally, "Macau's current-month run rate now exceeds that of the Las Vegas strip by about $US20 million a month," said Globalysis partner Jonathan Galaviz. Globalysis predicts Macau's gambling revenues will reach $US6.8 billion this year - topping an expected $US6.6 billion in revenues expected to be generated in Las Vegas."

I just read that Wynn Resorts purchased two helicopters to ferry folks from Hong Kong to Macau.

They are Sikorsky S-76C+++ if that means anything to anyone.

October 30, 2006 7:37 PM
Posted by Chris

Was in Macau over the weekend - mostly at Wynn but also Starworld and the Sands. Was amazed to see that all of them were overflowing with people.

Was nice to spend a bit more time at Wynn - the outdoor bar was a very pleasant place for a few beers on Saturday afternoon, though with only 5 or 6 tables the number of people is obviously quite limited. Tryst was packed in the evening. Had dinner at the Sands' steak house, which was superb.

Yes, you are right! That news about the helicopters came out about 2 weeks ago!

News just come through that Wynn Macau has just ordered two helicopters to directly compete with Stanley Ho�s helicopter business flying the high rolling punters directly from Hong Kong to Macau. Looks like things are getting bigger and better all the time!

Forbes has a special feature on China's 400 wealthiest people. It's amazing how quickly wealth is being amassed, and in looking at the list, how many are young people. China bodes well for casinos in both Macau and Las Vegas.http://www.forbes.com/

November 3, 2006 4:38 PM
Posted by Chris B

And they are merely the people that have semi-legitimate wealth capable of being calculated according to publicly available figures!

Was speaking to a friend in private banking the other day (whose bank shall go nameless) and basically the whole private banking industry in HK is now geared towards mainlanders. Apparently in their mad dash to develop a client base of rich mainlanders they are willing to forego the normal "know your client" type questions like "can you tell me where you got all this money from?"

I've been pretty much hanging around China since 1991 (other than 1992, I've been here every year and lived here most of those years) and I can't say that I know more than a handful of people that I would honestly say have made their fortunes based purely on a great business idea / model, business acumen, intelligence etc. At some point or another most people need to provide some benefits of a dubious nature to the right government officials (whether a holiday, a house, overseas education for their kids or simply a large payment of cash) to expedite licences, get the land they want or simply ensure that their businesses run smoothly. Most of the wealth on the Forbes list has been created by IPOs - so if not for a bunch of fund managers willing to buy into the "China" story then most of these fortunes wouldn't exist (or at least would be significantly smaller). Anyway, agreed with Detroit that it bodes well for both Macau and Las Vegas.

By the way, I'm switching from Chris to Chris B so that I'm not confused with another Chris that seems to have popped up on the blog.